The UK is seeing a number of its OEMs returning production to home soil, after decades of haemorrhaging subcontract engineering business to companies based overseas.
The latest figures from the manufacturing body, EEF, show that the UK is now the ninth largest manufacturer in the world. It’s perhaps no surprise to see countries such as China and the US dominating the forefront of the table; however, this re-emergence into the top ten gives us tangible insight into the buoyancy of our own manufacturing market in recent times.
The allure of offshore manufacturing has always had its roots in price, with many companies enticed away from the UK by the low cost of labour overseas. Although the wage gap between the UK and emerging countries has lessened, we still cannot compete when it comes down to price alone, leaving many to speculate on the real reasons behind the sudden rise in reshoring.
When your project is reliant on the arrival of components from half-way across the world, it is imperative that you factor in ample time for delivery. With lead times sometimes extending to several weeks and even months, an abundance of forward planning is needed within the manufacturing process – a luxury that is not always available to even the most well-prepared company.
It goes without saying that the longer goods are in transit, the greater the risk is of them becoming damaged in the process. Many organisations invest in shipping insurance to protect themselves against potential cost implications; however, with turnaround times already tight, there is no way of recovering a good reputation lost as a result of missed deadlines. Replacing damaged components can be a lengthy process, causing frustrating delays throughout the rest of the supply chain.
By returning production to the UK, companies are reaping the benefits of a fast turnaround, therefore eliminating the need for extended levels of foresight that are not always possible. The size of the UK allows for next-day delivery from coast to coast, meaning that mistakes can be easily rectified and components are rarely damaged in transit.
The industry is rife with horror stories about the quality of some of the components sourced from abroad. I remember speaking with one gentleman who had ordered a batch of machined parts from overseas, only to find that his Geiger counter started behaving very strangely upon their arrival. Indeed, the components he had ordered were not only of a poor quality – they were also slightly radioactive!
We don’t need to go anywhere near these extremes to understand why quality may be the missing link in the overseas supply chain. By outsourcing in any capacity you are relinquishing control to a certain degree; throw in thousands of miles in distance, as well as a language barrier and your ability to oversee the project in any capacity has entirely diminished.
Owing to the exceptionally long lead times associated with overseas manufacturing, it’s also harder to rectify quality issues in a prompt manner. Mistakes can take between weeks and months to become apparent and therefore, there is always a risk of missing deadlines if components fail to arrive as intended.
As the old adage goes, if you pay cheap, you pay twice and many companies now prefer to work with local suppliers that do not sacrifice quality in the name of saving their clients a few extra pennies per part. By sourcing within the UK, buyers maintain a tighter rein over third party supply, ensuring that the quality of components meets expectation and thus, deadlines are satisfied with no compromise on reputation.
Overseas manufacture doesn’t allow for the same levels of flexibility that UK sourcing does. With additional facets of rigidity through high minimum order quantities, there is little to no accommodation for ad-hoc, or low volume requirements that could easily be met through the use of a UK supply chain. Bulk orders can also prove to be a headache for organisations with limited storage facilities, sometimes resulting in additional costs being incurred to house the parts until they are required for use.
There’s also a lot to be said for having a strong working relationship with your supplier and these are difficult to build and maintain across oceans. National relationships between buyer and supplier mean that both parties are fully versed in each other’s expectations; the buyer can visit the supplier’s premises and gain a first hand understanding of their capabilities, whilst the supplier is able to receive insight as to what the buyer values most, whether this is a fast turnaround, or the ability to hold items in-stock. Plus, a supplier is going to feel much more inclined to help a buyer in a tight spot if they get on well.
Are Cheap Components Worth More Than A Solid Reputation?
If the current trend towards reshoring is anything to go by, then no. OEMs based within the UK are starting to see the value in the ensuing benefits from national sourcing; what’s more, the financial outlay can sometimes work out lower when the cost of fixing errors and chasing late deliveries is factored into account, not to mention lost business resulting from missed deadlines.
Any successful business knows that their reputation is their backbone, making or breaking their chances of longevity. Being well-known as a dependable company within your respective industry is crucial to survival and placing this in the hands of an unreliable supplier is becoming too much of a risk – albeit one which is completely avoidable.
By taking back control of third party involvement, companies are also taking back control of their reputation and ensuring that their business continues to thrive under a watchful eye.